Using a contribution margin format income statement to measure the mafnitude of operating leverage.

Faber company, a merchandising firm reported the following operating results:

Sales revenue(2,000 units x$100) $200,000

cost of goods sold( 2000units x$65) (130000)

Gross margin 70000

sales commission (10% of sales revenue) (20000)

Administrative salary expenses (15000)

advertising expenses (20000)

depreciation expense (11000)

shipping and handling expense (2000 units x$1) (2000)

Net income $2000

A. reconstruct the income statement using contribution margin format

B. Calculate the magnitude of operating levrage

C. Use the measure of operating levrage to determine the amount of net income the faber will earn if sales value increase by 10%